Robin Leigh is a highly experienced private investor and deal structurer, with extensive knowledge of investing in the UK and Asia. In the second part of our interview, Robin tells AIN about his strategies for navigating evolving markets and the benefits an experienced investor can bring a startup as a ‘thought partner’. He also highlights the importance of understanding regional differences for startups raising funds in different territories.
As market trends and economic situations evolve, what approaches are you employing to mitigate risks while identifying promising startups?
My angel investment decisions generally start from hearing a great idea, then trying to understand for myself whether I think the sector, opportunity and so on all offer the potential the founder believes. Each time I go through this process I’m therefore considering the relevant market trends and economic situation as they affect the risks of the investment. Overall, though, I stay very close to geopolitical and macroeconomic events as I manage a much broader portfolio of both liquid and illiquid investments across multiple geographies so I try to remain aware of the risks and to balance my overall portfolio by adjusting holdings.
You have extensive experience as a qualified lawyer, investment banker and consultant with McKinsey, how have these experiences benefited what you can offer as an angel investor?
I enjoy being involved in building a new business, solving the inevitable problems that come up, supporting activities where I have expertise, and learning about those where I don’t. This means that I’m often actively involved in building financial models or creating other analyses, negotiating and drafting legal documents, making introductions to potential partners, and being a ‘thought partner’ in developing strategy or considering options.
At the same time, I find it fascinating to better understand the dynamics and operating details of the business, where I will usually only have a limited understanding, and this is part of the process of my being able to provide the other support I’ve just indicated.
You’ve invested extensively in both Asia and the UK. In your experience, what are some of the most significant cultural, regulatory, or market-driven differences you’ve observed that impact the growth trajectory of startups in these two regions?
The best I can do in this limited context is to perhaps highlight a few of the key differences – and similarities – that I bear in mind. I should of course start by saying that Asia is itself a hugely varied market, with countries at very different stages of development, very different legal systems, and very different approaches to personal and business relationships.
Despite all the differences above, every market is comprised of people, and companies, who all want to improve their position, buy or sell great products and services, and benefit from doing so. This means that a lot of basic business principles are the same everywhere; understanding competitive advantage, supply and demand, potential economics, etc.
The differences do mean very different approaches to risk and structuring, though, and to how a business might be run. This could be because it’s harder to enforce contracts, because local political or bureaucratic support is more important, or because logistics or payment processing, for example, are more uncertain. Understanding these local complexities and challenges are key both to assessing risk for investors, but also to creating an edge if founders have a sustainable advantage in any of these areas.
How do you advise founders raising in these different environments?
Having a strategy to expand in to other markets is crucial if starting from a small market such as Singapore, unless that initial market can deliver very substantial scale – though even then, a growth strategy will support a higher valuation on exit. This is because linguistic and regulatory barriers can make regional expansion more challenging than in the European Union, for example.
I can’t really comment on how investors might differ between the two regions, which I’m sure would be of interest to founders, but my limited impressions are that in Asia the angel investor scene is both smaller and less experienced than in the UK. This means fewer investors, but also potentially less demanding investors, in Asia. The other side to this, though, is that they may be less willing to try to understand an opportunity in an unfamiliar sector or which has significant technical development risk, for example.
Related to this, in some Asian jurisdictions there is more of an expectation that deals will be concluded based more on ‘a handshake’ with less rigorous due diligence or documentation. My own preference is to avoid a lack of clarity and precision in the early days, since this can lead to future misunderstandings that are easily avoided. But that once a solid foundation is in place with strong due diligence and documents that set everything out clearly, it’s better to switch to a more fluid and open interaction that responds more easily to new developments.
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